As international competition has intensified, manufacturers have had to rethink their approach to the manufacturing activity in the factory. Companies are now recognizing the importance of defining strategic objectives based on current and future market requirements and by developing Performance Measurement Systems (PMS) consistent with these requirements. The issue of appropriate performance measures is thus a very significant one to consider. Not only can performance affect the commercial success of manufacturing companies, but in the present economic climate, many manufacturers will be looking for appropriate information about their internal processes to establish ways of cost-cutting, of enhance performance and generally of building better products and services in a shrinking market. The concept of performance measurement has been accepted, for some years now, as an essential part of World Class Manufacturing (Sellenheim, 1991) and the importance of measurement is well covered in the literature. However, methods for developing and implementing detailed measures adapted to the environment of a specific company are seldom described in detail (Ljungberg, 1994). Thisbook focuses specifically on designing and managing performance of a manufacturing unit from the corporate level to the shop floor level. It seeks to fill some of the gaps in the research by addressing three steps in designing a PMS, frame work of PMS specific to a manufacturing environment and implementation of Knowledge Based (KB) systems, GAP analysis and Analytic Hierarchy Process (AHP) approach in an integrated PMS. A Knowledge-Based Performance Measurement System (KBPMS) Model is developed that considers five levels of company Financial and Market Share, Customer Perspective, Manufacturing Competitive Priorities Perspective, Internal Process Perspective, and Resource and Method Availability Perspective. The KBPMS Model integrates the managing of performance across these five levels through sequential questions that assess both qualitative and quantitative factors. The KBPMS Model is integrated with an AHP and a GAP methodology and thus both qualitative and quantitative aspects of the PMS are identified, and key areas of potential improvement in the PMS are identified for each application.